Subject To? You Bet!!

[Brad Pickett]

This month I closed a subject to deal.  I know that a lot of people are hesitant to take over existing loans so I wanted to share this success story.  I will keep it short.  

I purchased the home subject to for 0 money down.  The house was in pretty bad shape but had strong bones so I was up for the challenge, or should I say the risk.  I purchased it for 91k and sold it conventionally 1 month later for 99.5k.  After closing costs and one months mortgage payment I made 7k.  Not bad.  

I originally marketed it as owner carry, and got a lot of interest. I was asking for 10k down, a payment that was 100 more than my PITI, and a 3 year balloon, possibly a 5 year. I planned to do a contract for deed and hold it in a long term escrow (some may call this a wrap). However when I got the cash / conventional offer I decided to take it because of a couple of reasons. One, it was a sure deal, and two I felt an obligation to get the mortgage paid if I had the chance to benefit the seller.

I have 2 other houses in my portfolio that are also subject to and they will both create great returns!

[Brian Gibbons]

Originally posted by @James Masotti:

@Brad Pickett - How do you approach a seller about subject to? This is a strategy I would like to try for acquiring rentals and flips that only need light rehab. 

Appreciate your thoughts and any tips you can provide!

 I've done many sub2s

I approach sellers all the same way, cash or terms

Light rehabs I do a JV w seller: buy on terms, fix, resell

Example seller owes 50, ARV 200

JV rehab 20 in rehab mat and labor

Costs to resell 10% or 20

My JV fee is 15k in this ex

So 

Sales price 200k - costs to sell 20 - repairs 20 - 1st Mortg Val 50 = 110 to seller in a note w balloon in 4 mo

Buy, fix and resell, pay off note

Compare that w wholesaling 

.7 X 200 - 50 1st - repairs of 20 = 70 to seller

Seller makes more money w my plan

Use private lender for light rehabs, 10% interest for 4 months use of money

Negotiating w sellers - search BP 

"Brian Gibbons negotiating"